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Regulation: 128 Crypto Asset Service Providers in South Africa File for Licenses

As of November 30, 2023, the Financial Sector Conduct Authority (FSCA) of South Africa reports that it had received 128 applications for licenses to operate as crypto asset service providers.

The Financial Sector Conduct Authority (FSCA) said in a presentation giving an update on the licensing of bitcoin services in South Africa:

  • 93 applications were received as of October 31 2023
  • 19 were withdrawn due to lack of experience and appropriate operational policies and procedure

The following deadlines were supplied by the FSCA for the 74 license applications that are still pending review:

  • 36 completed assessments to be presented at the December 22 2023 Licensing Executive Committee meeting
  • 22 applications pending for various reasons to be presented at the February 13 2024 Licensing Executive Committee meeting
  • 14 applications with analysis yet to begin to be presented at the March 12 2024 Licensing Executive Committee meeting
  • 2 undisclosed

Furthermore, FSCA ran a poll to which 47 applicants responded, providing insight into the makeup of the crypto assets market. In July 2023, FSCA notified all service providers that they risked closure if they did not have licenses.

The FSCA stated that while analyzing each possible licensee, it took a number of considerations into account. These variables include the importance of the market services, the variety of services they provide, and the availability of market support services like payment and custodial rails.

The FSCA evaluated the operational policies and procedures of the applicants as part of its evaluation process. This included elements like:

  • Know-Your-Customer onboarding (referred to as ‘FICA’ in South Africa)
  • Data protection measures
  • Cyber risk management
  • Conflict of interest management
  • Complaints handling
  • Credit counterparty risk management

Together with other regulatory agencies, FSCA carried out due diligence checks. This involved interactions with organizations like the Reserve Bank Financial Surveillance department and the Payments Association of South Africa.

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